CEE'S TOP BUSINESS LEADERS: Eastern Europe and Eurasia

Minsk-born Viktor Kislyi is the founder and major shareholder of the Wargaming group of companies, which is one of the rare global success stories to have originated in Belarus, writes Sergei Kuznetsov in Minsk.

The project was established in the Belarusian capital almost two decades ago and has grown into the current Cyprus-headquartered group with 15 offices and 4,000 employees worldwide. The group is now one of the leading international digital games developers and publishers, in a market that may achieve total revenues of $18bn in 2017. According to Wargaming's marketing materials, it has more than 150mn players across its multiple platforms.

In February 2016, the Bloomberg Billionaires Index valued the business of 40-year-old Kislyi at $1.5bn, giving the businessman a net worth of $1bn. Wargaming's founder refuses to comment on the size of his fortune.

Wargaming's flagship online product, The World of Tanks, was released in 2010, and has remained one of the most successful products on the market to this day. The game was developed on a free-to-play basis, but participants may obtain premium features for a fee.

One of the greatest challenges for the Wargaming business model is ensuring a balance between paying and non-paying participants, Kislyi told the Financial Times in 2013. "There is a very finely balanced in-game economy. We have a few dozen statisticians analysing the enormous amounts of data we generate every day. You have to study it because it’s very easy to ruin the economy with a few bad decisions," he said in an interview.

In 2011, Wargaming successfully entered the Cyprus Stock Exchange. However it was delisted after three years for failing to regularly publish its financial results. Commenting on the move, the company said that the instruments of the stock exchange "were no longer sufficient to objectively evaluate" the economic indicators of the firm.

In 2013, the company turned its eyes to another business segment, the banking sector, purchasing a stake in battered Hellenic Bank in Cyprus. Wargaming bought "a controlling stake" for $50mn, according to local media reports. Meanwhile, according to the bank's 2015 full-year financial statement, the firm controlled 27% of shares in the Cyprus lender as of late March 2016.

Like many a self-respecting oligarch from the former Soviet Union, Jewish-Ukrainian banking and media mogul Ihor Kolomoisky owns a sports club – Ukraine’s FC Dnipro, writes Nick Allen. But despite his peers’ often superior wealth (Kolomoisky’s dropped to $1bn-$1.5bn from almost $4bn in 2007), few can say they fielded their own private army of 20,000 paramilitaries.

It was because of Kolomoisky’s defence of Ukraine’s third city of Dnipropetrovsk at the peak of fighting between government forces and pro-Russian separatists in the east in 2014 that he is still somewhat “owed” by President Petro Poroshenko, who made him the region’s governor to ensure it remained in Kyiv’s hands.

It also might partly explain why Kolomoisky, 54, and his business partner Hennady Boholyubov are unlikely to answer for some $5bn in related party lending by their flagship asset, PrivatBank, before its nationalisation last December. Claims by central bank chief Valeriya Gontareva that $600mn was fraudulently moved out of PrivatBank by the owners on the eve of its transfer to government control are also unlikely to see either brought to account.

Kolomoisky didn’t last long as Dnipropetrovsk governor, however. Poroshenko stripped him of his post in March 2015 and had his volunteer battalion disbanded. The simultaneous severance of Kolomoisky’s de facto grasp on revenues of state oil pipeline operator UkrTransNafta nearly sparked a conflict in Kyiv between his armed musclemen and the central powers.

“If [former president Viktor] Yanukovych was a lumpen dictator, Poroshenko is the educated usurper, slave to his absolute power, craven to absolute power,” Kolomoisky said of his erstwhile ally.

But some debt of gratitude seems to sustain Kolomoisky even after he and his partner were pushed out of PrivatBank, which they started with $1mn in capital in the early 1990s. The bank grew to become a systemically important institution, handling more than a third of private deposits and serving approximately half of the country's entire population.

Their Privat Group retains other assets, including gas stations and oil refineries, while from his seat in Switzerland Kolomoisky controls a wider business empire of airlines and several Ukrainian TV channels through his 1+1 Media Group.

As well as ending on a sour note for Kolomoisky, 2016 began with a no doubt costly settlement of a $2bn lawsuit with rival Ukrainian oligarch Viktor Pinchuk, who sued him and Boholyubov over the 2004 purchase of a mining company. Laden with allegations of murder and bribery, the case and bad publicity alone seemed to prompt Kolomoisky to resolve it out of court. He strenuously denied perpetrating violent attacks and two murders linked to the case – one of a lawyer and one of the gangster believed to have killed him.

As a prominent supporter of Jewish causes who always seems to find the loopholes, Kolomoisky has triple Ukrainian-Israeli-Cyprus citizenship, despite a law penalising dual citizenship in Ukraine. By way of explanation, he has argued that, "The constitution prohibits double citizenship but triple citizenship is not forbidden."

As a descendent of Koreans forcibly relocated to Kazakhstan by Stalin, Vladimir Kim, the country’s fifth richest (Forbes, 2016) businessman, didn’t have any of the political connections granted by birth or marriage that most ethnic Kazakh oligarchs rely on – he had to forge his own, writes Kanat Shaku in Almaty.

Born in Almaty, Kim, 56, joined the Communist party and rose to the rank of deputy party chairman prior to Kazakhstan’s 1991 declaration of independence. In 1991, amid the disarray of the country’s transition to a market economy, Kim, like many senior communists, went into the private sector, becoming head of Korean chaebol Samsung’s new Kazakhstan-based subsidiary. In the mid-to-late nineties, Kim went on to head the predecessor of the Kazakhmys metals mining company, ZhezkazganTsvetMet, after Samsung took it over.

ZhezkazganTsvetMet had smelted 200,000 tonnes of copper a year prior to the demise of the USSR, but the company came to a standstill in the first decade of the 21st century under the weight of $180mn in debt. Samsung provided a $200mn loan to eliminate the debt and, renamed Kazakhmys in 1997, the company achieved lift-off under Kim’s direction and repaid Samsung within three years. Kim was granted a stake, the value of which eventually amounted to billions of dollars.

Kim’s leverage with President Nursultan Nazarbayev increased after another ethnic Korean, Vladimir Ni, an advisor and confidante of the president, joined the company board in 1999. The next year, Kim became board chairman, and with the company’s October 2005 listing on the London Stock Exchange, he was made chairman of the Kazakhmys PLC holding company. Less than a month after the death of Ni in 2010, Kim sold 11% of Kazakhmys to Kazakh sovereign wealth fund Samruk-Kazyna in a billion-dollar transaction.

Kim stepped down as chairman of Kazakhmys PLC in May 2013 and became a non-executive director. In 2014, London-listed Kazakhmys decided to separate loss-making old assets from promising new ones. As a result, KAZ Minerals was established to run profitable assets and Kazakhmys retained high-cost, mature assets. Following the restructuring, Kim also took a non-executive director position at KAZ Minerals PLC. Kim’s KAZ Minerals stake amounts to approximately 33%. Forbes gave Kim’s estimated net worth as $2.6bn, compared to $5.5bn in March 2007.

The Amazon-like DigiKala.com is one of Iran’s most promising startup stories. By now a behemoth of a website, it sells personal electronics, home appliances, and, thanks to its latest spin-off, DigiStyle, the latest international fashions.

Not that it’s been an unchallenged rise to the top. Though it had first mover advantage, DigiKala has had to face down competition from foreign and local firms alike to stay the leading e-commerce platform in the country.

The two founders and joint CEOs of the e-commerce site are the twins Saeed and Hamid Mohammadi. They have never revealed just how much of the company they have retained subsequent to multiple investments made by Swedish, Russian and Iranian venture capital firms, but nonetheless, several years of operations were enough to place them on Iran’s rich list in the world of commerce.

The Mohammadi story, you might say, is engraved into Iran’s digital stone. Back in 2006, the twins were shopping for a Digital SLR camera in Tehran’s electronics bazaar quarter. They purchased a brand-new camera body and a second-hand lens that came with no guarantee, and when they made a claim for their money back the store owner refused. The poor customer service and the lack of transparency in the sale fairly catapulted the brothers into action.

Outraged by their consumer experience, the siblings put forward $10,000 of their savings and launched Digikala.com from their apartment in central Tehran. Across the years, the pair have received at least three rounds of financing in growing their business. Initial outside investment came from Iranian venture capital group Sarava Pars, but the level of its commitment has never been publicly disclosed.

The company has grown year after year, essentially following the same business plan pursued by Amazon. Most of their inventory is warehoused and items are delivered within 24 hours to customers in the country of 80 million’s large cities. Orders are received from even the remotest villages in Iran.

In a 2014 valuation using Iranian sources, The Economist assessed DigiKala’s worth at $150mn. No foreign press estimates on the current value of the business have been published recently, but Iranian bloggers and valuation sites on the internet have suggested it could now be worth somewhere in the region of $700mn.

It is, however, tremendously difficult to gauge the true value of DigiKala, not least because it is the first e-commerce store in Iran to have become a household name. Nonetheless, if the latest valuation in circulation is correct, and assuming that the founders’ stake in the enterprise remains at least around the 20% mark, the Mohammadi brothers’ combined personal worth could be towards $120mn.

In 2016, Russian billionaire Vladimir Potanin became the first Russian to invest in the website through his Winter Capital Partners, according to Russia Today. The investment sum was not disclosed, but the investment was timely as it came in just as the firm’s competitors were taking onboard further funding to take on DigiKala’s dominance.

The e-business is holding on to a 70% market share according to closest competitor Bamilo.com, which itself is backed by Germany’s Rocket Internet and South Africa’s MTN mobile operator.

These profiles are part of bne IntelliNews' special cover feature on the top business figures in Central and Eastern Europe, published in our May magazine, with cartoons by Vladimir Kremlev. Our correspondents ranked business leaders in each CEE/CIS country not just on wealth but on influence. The full magazine can be viewed here. The tables for Eastern Europe and Eurasia can be viewed in the pdfs below:

Russia's central bank has given troubled Binbank an unsecured loan, but has not disclosed the amount as it starts the rescue of yet another large "Garden Ring" commercial bank.

The two surviving independent members of the supervisory board at Ukraine's gas monopoly Naftogaz quit on September 19, citing "the government’s lack of commitment to duly implement the corporate governance reform".

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